Meeting:

Monthly Meeting - August 2002

 

Held at:

The Brocklebank

Date:

28th August 2002

 

 

Time:

17:30 – 19:00

Prepared by

Dave G

 

Chairperson:

Simon B

 

Present:

Kit P

 

 

Dave G

 

 

Chris B

 

 

Adrian T

 

 

Simon B

 

 

Richard W

 

Apologies:

None

 

 

 

Chairman’s Acceptance of Minutes

 


_____________________________________________


____ / _____ / ____

Signature

Date

 

 

 

 

1                            NEXT MEETING

Thursday 19th September 2002    17:15 – 18:45

Venue: The Brocklebank

2                            Minutes of previous meeting

The minutes from the last monthly meeting were accepted except for the following:

·      Item 2 said “accepted except for the following” then had a null list.  Not technically incorrect but …….

·      Stop Loss criteria said “as of 12th December 2001”.  Should be updated

·      Annual report section should have added as statement saying that the auditors approved the report

3                            ACTIONS FROM PREVIOUS MEETING

3.1                    Actions Closed Since Last Meeting

Ref.

Description & Progress

Status

ALL/0724/02

Update Strategy for Mechanical portfolio to SELL after one year and BUY in the following month.

Dropped – See item 8 in minutes

3.2                    Actions Carried forward to Next Meeting                     

See end of these minutes

4                            Treasurer’s Report

4.1                    Monthly Report Summary

See separate report for detail. 

Highlights – unit value up from 306.868 to 323.794;  net assets for distribution £10538.17;  available cash £2831.78.

4.2                    Matters Arising From Report

Chris handed out completed forms to help us with our tax returns

5                            Lucky Llama competition

This Month’s Winner: Dave who also still has the yellow jersey.

Only Richard and Dave made changes to their selections for this month which is the last of this particular ‘season’.  All need to advise Richard of new selections for a new portfolio either at or just before the next meeting.

6                            PORTFOlio Management

6.1                    Mechanical Portfolio

Woolworths was the selection from the mechanical portfolio criteria.  Richard to put any Corbettophobia to one side and purchase £800 of the stock

6.2                    Monthly Reports and Recommendations

Fundamental Portfolio:-

Headlam

HOLD

Logica

HOLD

Fulcrum

HOLD

 

Speculative Portfolio:-

Parity

HOLD

Atlantic Caspian

HOLD

Templeton Emerging

HOLD

London Clubs International

HOLD

Cape

HOLD

 

Mechanical Portfolio:-

Countryside Properties

HOLD until October 2002

Wimpey (George)

HOLD until December 2002

Westbury

HOLD until February 2003

Crest Nicholson

HOLD until April 2003

Savills (SVS)

HOLD until June 2003

6.3                    Stop Loss / Sell Criteria (as of date of treasurer’s report)

The following is the summary of stop loss positions for each stock in the “Fundamental” sub-portfolio.  The stop loss is invoked against the “end of day” price, but the sell decision may wait for the opening price to avoid rogue trades at the end of day.

Stock

Reportee

“High” Price

Stop Loss (based on the “high”)

Exit Criteria

LOG

Richard

197

200

Hold until at least November 2002 then sell if under 200.  Commence 20% Trailing Stop Loss once above 350 but VOTE rather than an immediate mechanical SELL

HEAD

Richard

284

227.2

20% trailing

FUL

Dave

14.5

8

Hold until at least December 2002 then sell if under 8p.  Commence 25% trailing stop loss once above 20p

6.4                    New Buy Proposals

None (other than mechanical selection above)

7.                         Competitions

WWW.SHAREORACLE.COM website share game is up and running with monthly prizes.  The club has one entry in (with up to 5 allowed).

Our August entry to the Mirror competition was bounced because our membership of Proshare had lapsed.  Dave to contact Proshare to re-subscribe.

8.                         ANNUAL Strategy REVIEW

Richard had written analysis reports on each of the three sub-portfolios and these were discussed at the meeting.  Key agreements as follows.  Dave to update strategy document accordingly:-

Mechanical Portfolio

Performed very well, though a little heavy in the construction sector.

Our filter for PE is that it must be lower than 0.85 times the market average PE.  Similarly the Yield must be more than 1.2 times the market average yield.  The market average PE and yields are taken from the FT but these use FRS3 based earnings.  Suggestion is to change these to use normalised earnings.  This was agreed as it was what the stock screener tool uses to filter individual stocks so it would make it easier/consistent.

We currently purchase whichever share comes out top of the ranked list (unless it’s one we already hold).  Suggestion is to change this so we don’t purchase a share if it would result in the mechanical portfolio having more than 2 from the same sector (unless there was no other choice).  This was agreed as an aid to sector diversification.

Explicitly state that we consider dividends from mechanically selected shares to be part of the returns/cash of the mechanical portfolio. 

Execute sales after the meeting which is the 1 year anniversary of the purchase of the stock, and make the purchase of any newly selected stock on the same day (rather than waiting for the following month which had been considered at a previous meeting).

If running the screener results in no shares passing the filters that aren’t already held, then relax the yield filter to 1.1 times the average and, if still nothing, relax further to 1.0 times the average.  If still nothing then make no purchase but run the screener the following month instead.  If still nothing then force a review of the selection criteria.

Fundamental Portfolio

Not done too well in last year (though still beaten FTSE) and well up on FTSE since club began.  Working generally well though could do with more buy proposals being brought forward.  Suggestion to have a pooled “watchlist” documented in the minutes at the next meeting which may help focus attention on potential purchases.

Speculative Portfolio

Yes, well, mmmm, indeed!!  Not the most successful portfolio in the world.

Could scrap the portfolio but considered best to keep it as it helps distinguish between more solid proposals which would be suitable for the fundamental portfolio, and higher risk ‘punts’, which might not be proposed should this sub-portfolio be scrapped.

Change the objective to simply beating FTSE rather than beating it by 50% (which is a little ambitious).

Currently need to have between 10% and 25% of overall value in this sub-portfolio which means that if everything in it keeps going down, we need to keep putting more and more into it.   Agreed to relax the minimum from 10% to 0%

Default exit criteria all based on an assumption of increasing share price.  Agreed to change the default exit criteria to have a sell on a 50% reduction from purchase price.

Actions carried forward to next meeting

Ref.

Description & Progress

Target Date

DG/0919/04

DG to add stop loss summary to Web site

1017: No progress

1120: In progress

1212: No further progress – hasn’t updated web site for around 4 months so will start to do so

0116: No progress

0220: No progress

0321: No progress

0424: No progress

0528: No progress

0627: Some progress

0724: No progress

0828: No progress

19/09/2002

KP/0116/02

Bring in Constitution for Adrian to sign

0220: No progress

0321: No progress

0424: No progress

0528: No progress

0627: No progress

0724: No progress

0828: No progress

19/09/2002

CB/0724/01

Update Club member list with Charles Schwab and Cater Allen

0828: No progress

19/09/2002

DG/0828/01

Contact Proshare and re-register the Club with Proshare

19/09/2002

ALL/0828/02

Bring new selections for new lucky llama portfolios for the next meeting

19/09/2002

RW/0828/03

Purchase £800 of Woolworths for the mechanical portfolio

29/08/2002

DG/0828/03

Update the club strategy in accordance with the discussions of the 28th August meetings’ annual review

19/09/2002

ALL/0828/04

Bring any “watchlists” of stocks that are being considered as possible buy proposals so that they can be consolidated and carried forward as a “club watchlist” in the minutes

19/09/2002

 
Proposed agenda for NEXT meeting.
 
RSIC Monthly Meeting – Thursday 19th  September between 17:15 and 18:45

Venue: The Brocklebank

1.     Date of Next Meeting (4 mins)
[Agree a date for the next meeting]

2.     Agenda Changes? (2 mins)
[Any items for AOB or any suggested reordering of agenda?]

3.     Minutes of last meeting (1 min)
[Any comments on minutes from previous meeting

4.     Actions from last meeting (20 mins)
[Progress on actions]

5.     Treasurer's Report (10 mins)

6.     Portfolio Management (30 mins)

6.1. Mechanical Portfolio

6.2. Monthly Report for each Company in Fundamental Portfolio

6.3. Latest sell conditions for each share held

6.4. New Buy Proposals

7.     Lucky Llama Competition (10 mins)
[Latest positions and any new buy/sell decisions]

8.     Competitions (10 mins)

9.     AOB